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Poll: How much % taxable brokerage do you have?

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  • #31
    Originally posted by JBME View Post
    Also what is early retirement age? Many would consider age 54 or 55 early retirement, and you can pull money out of your 401k penalty free if you quit at age 54 because you can pull money out in the year you turn 55 as long as you quit
    Thanks for that information, I didn't realize that! Our youngest will graduate HS when I'm 53 so ideally I *think* that is when I'd retire but I wasn't sure exactly how that would work. . . Now I have more options!

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    • #32
      Originally posted by wideopenspaces View Post

      Thanks for that information, I didn't realize that! Our youngest will graduate HS when I'm 53 so ideally I *think* that is when I'd retire but I wasn't sure exactly how that would work. . . Now I have more options!
      yes research further. It has to be the calendar year where you turn 55. I'm "blessed" being a november birthday so I can theoretically use this method just several weeks after I turn 54 I am personally someone who wouldn't want to retire until my kids are out of the house, and the youngest will be out the year I turn 55. How convenient! I don't know if I'll actually do it though...but I don't really desire to retire before 55 at minimum so this is our option. Also, we don't have a taxable account and I'm fine with that because we have so much tax deferred space (saving well over 25% with just the space we have) so this is pretty much my plan, should I choose it. might continue to work longer too depending on how much I like my job at that point

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      • #33
        Originally posted by JBME View Post

        yes research further. It has to be the calendar year where you turn 55. I'm "blessed" being a november birthday so I can theoretically use this method just several weeks after I turn 54 I am personally someone who wouldn't want to retire until my kids are out of the house, and the youngest will be out the year I turn 55. How convenient! I don't know if I'll actually do it though...but I don't really desire to retire before 55 at minimum so this is our option. Also, we don't have a taxable account and I'm fine with that because we have so much tax deferred space (saving well over 25% with just the space we have) so this is pretty much my plan, should I choose it. might continue to work longer too depending on how much I like my job at that point
        It is nice to have options!

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        • #34
          This is the beauty of 457 gov plans and the backup lifeboat for us if we hit the early retirement button. Also able to tap equity on direct real estate if needed to float until SS and pensions hit. Penalty for early pension is anywhere from 3-5% depending on which ones so letting them fully mature is ideal in current state.

          Who knows in 12 years.

          Not counting our primary mortgage payoff fund; the slush taxable account is a measly 5% of NW

          edit - counted wrong 5%

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          • #35
            +/- 15% in currently tax deferred. The percentage goes down every year. When I was a young attending, it was more like 80% of assets other than home equity in tax deferred.

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            • #36
              I believe that Johanna posted that she recommends to her clients 1/3 Roth, 1/3 tax deferred, 1/3 taxable. I am currently 75% taxable, 3% Roth, 22% tax deferred. I am trying to increase Roth and decrease tax deferred. It is very hard to picture what happens over a career. Roth accounts did not even exist when I started.

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              • #37
                Originally posted by Panscan View Post

                Do you plan on early retirement or just going part time or what is your plan to transition? To me that seems to be the biggest purpose of taxable, to serve as a buffer so you don't have to pay penalties to access your tax protected money. That is the problem I'm envisioning for my future, a large tax-protected space which would theoretically enable early retirement however it wouldn't really be accessible without penalty for at least a decade or two beyond when that early retirement/part time date is.
                remember that i'm full time academic EM, so i suspect my "retirement" will be very squishy.

                i'm in a great position where with some admin/academic stuff i already only work about half time clinically so my risk of burnout/fatigue is about as low as it can be for an acute care doc.

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                • #38
                  About 20% for us right now (both academic docs with all the respective 403b/457b accounts and 2:1 matching)...but that percentage is slowly growing as our loans are gone and we're saving more

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                  • #39
                    Originally posted by Panscan View Post

                    Do you plan on early retirement or just going part time or what is your plan to transition? To me that seems to be the biggest purpose of taxable, to serve as a buffer so you don't have to pay penalties to access your tax protected money. That is the problem I'm envisioning for my future, a large tax-protected space which would theoretically enable early retirement however it wouldn't really be accessible without penalty for at least a decade or two beyond when that early retirement/part time date is.
                    Roth contributions (but not earnings) can be withdrawn any time without penalty. Rollovers to Roth (but not earnings) can be withdrawn 5 years later. So I plan to ladder out rollovers from 401k to Roth to the sensible tax bracket cutoff 5 years in advance of withdrawal. Just need enough taxable or Roth basis or separate income to make it the first five years.

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                    • #40
                      We are at 66% taxable despite trying to max out all tax deferred options. Currently maxing out Roth, HSA, 401k PS/SH, Cash Balance, 529, and would love to find more tax deferred space.
                      Unfortunately all non-qualified options I've seen are tied to life insurance products, with uncertain terms and very long breakeven periods. Any suggestions would be welcome.

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                      • #41
                        Originally posted by molar roller View Post
                        We are at 66% taxable despite trying to max out all tax deferred options. Currently maxing out Roth, HSA, 401k PS/SH, Cash Balance, 529, and would love to find more tax deferred space.
                        Unfortunately all non-qualified options I've seen are tied to life insurance products, with uncertain terms and very long breakeven periods. Any suggestions would be welcome.
                        I’m in a similar boat, and I think with your high income, ending up heavily weighted toward taxable is inevitable. A second income source and solo 401k, or working spouse with tax-deferred options would help, but even then...

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                        • #42
                          Originally posted by abds View Post

                          I’m in a similar boat, and I think with your high income, ending up heavily weighted toward taxable is inevitable. A second income source and solo 401k, or working spouse with tax-deferred options would help, but even then...
                          Even then. Wife worked for most of her career, took a 2 year break recently. Her plans helped a little bit but not very much.
                          Cash Balance plan helps a lot. I'm still relatively young (47), so my pay credit is not very high at around $130K/yr. Still, with that, two 401ks, safe harbor/profit sharing, backdoor roth and HSA, we can get up to just under $250K/yr. But I am a solo doc with full control of my 401k plan design. For those in large groups or working for hospitals, probably even harder.

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                          • #43
                            Originally posted by molar roller View Post
                            We are at 66% taxable despite trying to max out all tax deferred options. Currently maxing out Roth, HSA, 401k PS/SH, Cash Balance, 529, and would love to find more tax deferred space.
                            Unfortunately all non-qualified options I've seen are tied to life insurance products, with uncertain terms and very long breakeven periods. Any suggestions would be welcome.
                            I have a suggestion.

                            It's not a qualified account - still a taxable account (no asset protection), but it does have legitimate tax deferral and competitive rates, without the added layer of fees that life insurance products would have. It's not particularly sexy, but... series I and series EE savings bonds purchased through treasurydirect.gov.

                            We have all of our emergency fund in series I savings bonds. This has a higher yield than any savings account currently available. It has a higher yield than TIPS (and similar inflation protection), with an effectively shorter duration. You and your spouse can each purchase $10k/year. There are some catches, like you can't redeem within 12 months, small penalty if held less than 5 years, etc. But tax-deferred interest, and possibly tax-free interest if used for certain educational expenses.

                            The current yield on series EE savings bonds is very low, with the catch that they double in value if you hold them for 20 years, for an effective yield of about 3.52%. Obviously this isn't earth shattering - but compared to 20 year treasuries (1.92% as of today) it is attractive. Also tax-deferred interest, and possibly tax-free interest if used for certain educational expenses. Not worth purchasing unless planning to hold for 20 years, so it is kind of like a zero-coupon 20 year bond. It does have the benefit of being redeemable after 12 months (with paltry interest), and being able to invest in other bonds if rates were to go up substantially. You and your spouse can each purchase $10k/year.

                            If you want an extra $5k of either of these, you can overpay your taxes and get your refund in savings bonds instead of having your refund wired to your checking account. The paper savings bonds they send you for a tax refund are cool, but impractical to store and redeem. Purchases through treasurydirect.gov are all electronic.

                            So... the play here is this: If you have any bonds in your qualified, tax-deferred retirement account - sell them and purchase equities in the same account, then use your taxable account to purchase savings bonds to get your bond allocation back to where you want.

                            I recognize that nobody is getting excited about bonds right now, but if you are looking to "expand" your tax deferred space, this is one way.

                            Last edited by PHANTASOS; 02-17-2021, 10:16 PM.

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                            • #44
                              Originally posted by Hatton View Post
                              I believe that Johanna posted that she recommends to her clients 1/3 Roth, 1/3 tax deferred, 1/3 taxable. I am currently 75% taxable, 3% Roth, 22% tax deferred. I am trying to increase Roth and decrease tax deferred. It is very hard to picture what happens over a career. Roth accounts did not even exist when I started.
                              That's a fine recommendation, but it's completely impractical for many. If you are an employee with a very high income and not much access to tax protected space, then it's very difficult to impossible to do. Especially if employer plans don't allow mega backdoor Roth.

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                              • #45
                                Originally posted by billy View Post

                                PhysicianOnFIRE has a couple of posts on how to access them penalty free. Plus you dont know how much of MPMD money is in 457 plans vs 401k/403b vs roth so there are multiple ways he can access it if he wants.
                                if you choose to slow down the fire and go part time as your "early retirement", you might be able to work just enough to cover expenses while letting your accounts continue to grow tax free- someone at my workplace (anesthesia) is 60, doing 28 weeks a year with no call to maintain bennies and cover expenses. With radiology that may be a possibility.
                                billy Can you remind me re: rules for governmental 457? I know I can roll it to my i401K but can you just pull it out? Obviously, taxes would be bad if you did the whole thing... but were you thinking partial? How soon do you have to pull it out? Thinking it would be smart to finish working in Dec and pull out when you have no other income in Jan....

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